Lesson 2 Flashcards
Our economy is made up of two broad groups:
- Producers 2. Consumers
Producer
person, company, or country that makes, grow, or supplies goods, or commodities for sale.
Factors of production 4
- Land - natural resources
- Capital- money, tools, equipment, machinery etc
- Labor - people/workers
- Entrepreneurs- individual risk - takers
__________ that is made requires these four factors of production
Everything
Opportunity cost
the cost/value of the next best alternative given up. (Money time, resources)
Trade offs
alternative choices that must be given up in favor of the choice we select ( all the other alternatives)
Both ________ and __________ face opportunity cost and trade offs
Producers
Consumers
Consumer
a person who purchases goods and services for personal use
Consumer rights that protect them against producers - 5
- Right to safety
- Right to be informed
- Right to choose
- Right to be heard
- Right to redress
Consumerism
1960s
This social movement was an attempt to educate Byers about purchases they make and demand better and safer products
Four economic systems
- Traditional economy
- Command economy
- Market economy
- Mixed economy
Traditional economy
an economic system in which production, investment, prices, and incomes, are determined by rituals, habits, customs, and beliefs
Advantage of traditional economy
- Everyone knows what, how, and for whom to produce - based on tradition
Disadvantage of traditional economy
- Tens to discourage new ideas and new ways of doing things
2. Creates a lack of progress
Command economy
an economic system in which production, investment, prices, and incomes are determined by a central authority (king, dictators state, government, etc
Advantages of command economy
- It can change direction drastically
2. Allows people to receive some services they otherwise may not be able to afford (healthcare)
Disadvantages of command economy
- Leaders provide for themselves at the expense of the general population (get rich)
- The loss of individual freedom to choose
- A low quality and quantity of goods
- Tax rates are high
What is a modern, liberal version of the command economy
Socialism
Define socialism
an economic and political system in which the gov owns some, but not all the factors of production and makes most/all of the economic decisions
Market economy
an economic system in which production, investment, prices, and incomes, are determined and controlled by buyers and sellers (individuals) freely conducting business
Advantages of market economy
- Individual freedom
- It adjusts gradually to change over time
- Relatively small degree of government interference
- Provides a wide variety of goods and services
Disadvantages of market economy
- Does not provide for everybody
2. Can have a high degree of uncertainty
Mixed economy
an economic system blending elements of market economies with elements or command economies and traditional economies
Advantages of mixed economy
Can take on the advantages of the other economies
Disadvantages of mixed economy
Can also take on the disadvantages of the other economies
In a market economy, The what how and for whom to produce questions are answered by the….
Consumer
In a command economy, who decides what how and whom to produce
Central authority
Capitalism
the most powerful engine here rating wealth the world has ever seen
Communism
Is an ideological and a social political movement whose aim is to set up a better version of society.
Author of communism
Karl Marx
• a communist society would be based on the _________ _____________ of the factors of __________ and would not rely on _________ __________, or _________ (extreme form of _________)
• this society would be based on the common ownership of the factors of production and would not rely on social classes, or money (extreme form of socialism)
